Most families spend years building savings and almost no time deciding how those savings will pass on. The result is frozen accounts, months of paperwork and, too often, disputes between relatives. The single biggest source of confusion is the difference between a nominee and a legal heir.
Nominee vs legal heir: the one idea to understand
A nominee is the person the bank, depository or fund house will pay when you die. Paying the nominee lets the institution close the matter quickly without a court document. But for bank deposits, shares and mutual funds, the nominee generally receives the money on behalf of your legal heirs; it does not make them the owner. The Supreme Court confirmed this for shares in 2023 (Shakti Yezdani v. Jayanand Salgaonkar) and earlier for bank deposits.
Who your heirs are is decided by your will, or, if you have no will, by the succession law that applies to you. So if your nominee is not the person your will names, the nominee can be required to hand the money over.
The nomination rules in 2026
| Asset | Nominees allowed | What changed |
|---|---|---|
| Bank deposits | Up to 4, successive or simultaneous | Since 1 November 2025, under the Banking Laws (Amendment) Act, 2025. Lockers allow up to 4 successive nominees. |
| Demat accounts and mutual fund folios | Up to 3 | Since 1 September 2026, under SEBI’s circular of 29 May 2026. Nomination is mandatory for new single-holder accounts unless you formally opt out. |
| Life insurance | One or more | Spouse, children or parents named as nominees are treated as “beneficial nominees” and are entitled to the money, unlike most other assets. |
Seven mistakes that cause the most trouble
- No nominee at all. Your family may need a succession certificate or other court papers to claim even modest balances.
- An outdated nominee. A parent named twenty years ago who is no longer alive, or a former spouse, is a common problem.
- Treating the nominee as the heir. Naming one child as nominee does not disinherit the others. If you want unequal shares, say so in a will.
- Nominations that contradict the will. Keep them consistent, or state clearly in the will that nominees hold the money for your beneficiaries.
- Forgetting some accounts. Each bank, broker and fund house keeps its own nomination. A nomination with your broker does not cover mutual funds bought directly from a fund house.
- A minor as nominee without a guardian. Name a guardian so the money can be received on the child’s behalf.
- No list of assets. Families often don’t know which accounts, policies and investments exist. A simple, updated list kept with your will saves months.
Writing a simple will
- Write it while you are in good health, sign it and have two witnesses sign it in your presence. Witnesses should not be beneficiaries.
- Name an executor you trust to carry it out.
- Registration is optional in India but makes the will harder to dispute and easier to locate.
- Review it after major life events: marriage, the birth of a child, a death in the family, or buying property.
- For property, family businesses or blended families, have a lawyer draft or review it. Ask about probate and any requirements specific to your situation.
A 30-minute action list
- Log in to your net banking, broker and mutual fund accounts and check every nomination.
- Add or update nominees online, with percentages if you want unequal shares.
- Make a one-page list of all accounts, policies, investments and property, and tell a trusted person where it is.
- If you don’t have a will, book time this month to write one.
Disclaimer: This article is general information based on publicly available rules and reports as of October 2026. It is not legal, tax or financial advice. Succession and nomination rules differ by personal law, institution and circumstances, and may change. Consult a qualified lawyer for your will and estate planning, and confirm current procedures with your bank, depository participant, fund house or insurer. Mungekar Wealth accepts no liability for any loss arising from reliance on this article.
